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Mieila, Mihai. "Modified Internal Rate of Return." International Journal of Sustainable Economies Management 6, no. 4 (October 2017): 35–42. http://dx.doi.org/10.4018/ijsem.2017100104.
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The evaluation of the efficiency of investments relies on a system of measures based on actuarial techniques that consider the time value of money. One of the common measures used is the Internal Rate of Return (IRR). Commonly, by applying of the efficiency evaluation criteria, result consistent outcomes. In this paper, the author tries to highlight that, based on its theoretical assumptions and practical drawbacks, considering of this measure in evaluation of the investments decisions may lead to erroneous decision. Despite the fact that the Internal Rate of Return (IRR) has never had a favorable academic press, the surveys outline that financial managers seem just to enjoy this measure. The aim of this paper is to summarize the drawbacks of this indicator and to offer a presentation of the Modified Internal Rate of Return (MIRR), as a solution to express a project performance by using of a percentage measure concomitant to discard the unrealistic assumption of reinvestment of cash flow stream just at the value of the IRR, allowing a straightforward calculation.
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Patrick, Michael, and Nick French. "The internal rate of return (IRR): projections, benchmarks and pitfalls." Journal of Property Investment & Finance 34, no. 6 (September 5, 2016): 664–69. http://dx.doi.org/10.1108/jpif-07-2016-0059.
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Purpose The purpose of this paper is to discuss the use of the internal rate of return (IRR) as a principal measure of performance of investments and to highlight some of the weaknesses of the IRR in evaluating investments in this way. Design/methodology/approach This Education Briefing is an overview of the limitations of the IRR in making capital budgeting decisions. It is illustrated with a number of counter-intuitive examples. Findings The advantage of the IRR is that it is, on the surface, a wonderfully simple benchmark. One figure that tells a story. But, the disadvantage is that if used in isolation the IRR can give misleading results when used to assess investment proposals. Practical implications The IRR should be used in conjunction with other analyses to appraise projects, so that the user can determine its veracity in the context of other benchmarks. This context is particularly important when assessing investments with unusual cash flows. Originality/value This is a review of existing models.
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Fritsche, Steven R., and Michael T. Dugan. "Bias And Random Measurement Error In Accounting-Based Surrogates For Internal Rate Of Return." Journal of Applied Business Research (JABR) 12, no. 2 (September 12, 2011): 58. http://dx.doi.org/10.19030/jabr.v12i2.5827.
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<span>Limitations inherent in alternative profitability measures as estimates of internal rate of return (IRR) often require that managers and researchers employ accounting-based profitability measures. Using published accounting and stock market data, this study models accounting rate of return (ARR) and conditional estimate of internal rate of return (CIRR) as functions of product market risk; growth (g) inventory cost flow assumption (INV), and depreciation method (DE). The models support inferences about the bias and efficiency (i.e. systematic and random error) in the relationships between the two accounting-based profitability measure and IRR, as estimated by the bias and efficiency in their relationships with a factor that is suggested in the finance literature as a determinant of systematic risk (product market risk). The results indicate that ARR estimates IRR with bias attributable to g; however, ARR is unaffected by INV and DEP. Whether g, INV, or DEP affect CIRRs ability to estimate IRR depends on the interval over which CIRR is estimated and the assumed cash flow pattern. On the other hand, CIRR generally estimates IRR with significantly greater efficiency. These results have research design implications, as well as implications for both accounting policy formulation and anti-trust policies.</span>
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BLATT, C. R., and R. J. O’REGAN. "MANAGEMENT PROGRAMS FOR THE LOWBUSH BLUEBERRY: NATIVE STAND VS. CULTIVATED CLONES AND SEEDLINGS." Canadian Journal of Plant Science 70, no. 3 (July 1, 1990): 879–86. http://dx.doi.org/10.4141/cjps90-108.
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An economic analysis was carried out using costs and returns for the establishment of a 3-ha planting of a mixture of cultivated lowbush blueberry clones and seedlings and the establishment of a similar sized native stand of wild blueberries. Two management programs were applied to two 3-ha cultivated stands and these were compared with the traditional crop-burn-crop program used in the native stand. Capital and startup costs were higher for the cultivated blueberry stand, but crop productivity and returns were also higher. Over a 20-yr lifetime, internal rates of return (IRR) averaged 10% higher for cultivated stands. A 20% market price drop would result in a 6–7% IRR decrease for the cultivated stand; however, the resultant 15% IRR is still an acceptable return. In contrast, a similar price drop for the native stand product caused the IRR to drop from 11% to zero. However, should market price be equivalent for native and cultivated stands, the IRR for the native stand is higher at all prices. With the native stand IRR at 11%, there has to be a 40–45c kg−1 price differential against the cultivated stand in order for all IRR values to be similar.Key words: Economics, internal rate of return (IRR), sensitivity analysis, Vaccinium angustifolium Ait.
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Roenganan, Sorrawee, Masnita Misran, and Nattakorn Phewchean. "A Study of Life Internal Rate of Return." WSEAS TRANSACTIONS ON MATHEMATICS 20 (April 2, 2021): 122–33. http://dx.doi.org/10.37394/23206.2021.20.13.
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Life insurance, not included as a part of the legal obligation in some countries, is one of the investment approaches that might not stand high in the public favor for some people since this is a type of investments that the investor cannot know beforehand the exact return, and the returns completely depend on uncertainty of the policy specification in some circumstances. Similar to the other kinds of investment, investors in life insurance products have been seeking a tool for investment evaluation. However, currently there are no accurate tools that can provide the value of the investment in a life insurance product sensitive to the uncertainty. Internal rate of return is the basic tool that buyers or bankers may apply in order to find the rate of return of this type of investment. The investment decision tool is one of the most important keys that investors have utilized upon making their decisions on investments. Therefore, in this research, we propose a new mathematical model with applications for investment decision, being an extension of the internal rate of return by taking into account the life probability, considering different types of life insurance policies, and other factors specified on life insurance investments such as the premium, the death benefit, the maturity value, the sum insured, the lapse rate, the surrender value, the annuity certain, and the lapse rate with different genders and ages. This newly proposed model is named as the "Life Internal Rate of Return" or Life-IRR model. By using the sample data for both males and females aged 30 years old with expected benefit of 100,000 baht for different types of life insurance policies which are endowment plan, whole life plan and retirement plan, the results show that, for males, the highest life rate of returns is that obtained from the retirement plan (3.633692%), and the lowest life internal rates of returns is that obtained from the endowment plan (2.384443%), while the whole life plan offers moderate life rate of returns of 2.427941%. For females, the highest life rate of returns is that obtained from the retirement plan (3.335189%), and the lowest life internal rates of returns is that obtained from the whole life plan (2.104658%), while the endowment plan offers moderate life rate of returns of 2.308062%. The sensitivity analyses of the life internal rates of return perform the natural characteristics of life insurance.
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Hajdasinski, Miroslaw M. "TECHNICAL NOTE—THE INTERNAL RATE OF RETURN (IRR) AS A FINANCIAL INDICATOR." Engineering Economist 49, no. 2 (January 2004): 185–97. http://dx.doi.org/10.1080/00137910490453437.
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Kierulff, Herbert. "IRR: A Blind Guide." American Journal of Business Education (AJBE) 5, no. 4 (July 10, 2012): 417–26. http://dx.doi.org/10.19030/ajbe.v5i4.7119.
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Over the past 60 years the internal rate of return (IRR) has become a major tool in investment evaluation. Many executives prefer it to net present value (NPV), presumably because they can more easily comprehend a percentage measure. This article demonstrates that, except in the rare case of an investment that is followed by a single cash return, IRR suffers from a definitional quandary. Is it an intrinsic measure, defined only in terms of itself, or is it defined by the efforts of active investors? Additionally, the article explains significant problems with the measure - reinvestment issues, multiple IRRs, timing problems, problems of choice among unequal investment opportunities, and practical difficulties with multiple discount rates. IRR is a blind guide because its definition is in doubt and because of its many practical problems.
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Kookkaew, Pathompong. "Cost and Benefit Analysis of One Tambon One Product: A Case study of Rattan and Bamboo Wickerwork Products Group of Bantungfak, Thailand." Journal of Business and Economics 10, no. 7 (July 20, 2019): 654–57. http://dx.doi.org/10.15341/jbe(2155-7950)/07.10.2019/006.
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The purposes of this research study were cost and benefits analysis of Rattan and Bamboo Wickerwork Products Group. Qualitative study was employed to collect and analyze data using in-depth interview. Interview questions were related to costs and benefit, and return on investment analysis — Net Present Value: NPV, Internal Rate of Return: IRR, Benefit and Cost Ratio: B/C Ratio at Discount Rate of 7% of 10 years of project life. The results reveal that Net Present Value (NPV) was 137,391 Baht, Internal Rate of Return (IRR) was 30.89%, Benefit and Cost Ratio (B/C Ratio) was 1.04. Financial return is in capital investment decision criteria.
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Sweeney, Robert J. "Reinvestment Bias When Analyzing Mutually Exclusive Assets." Journal of Applied Business Research (JABR) 2, no. 3 (November 1, 2011): 71. http://dx.doi.org/10.19030/jabr.v2i3.6572.
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Capital budgeting decisions generally involve the commitment of resources in the current period to secure positive cash flows over time that generate a rate of return in excess of the cost of the funds invested. The most common techniques used to perform this analysis are the Net Present Value (NPV) and the Internal Rate of Return (IRR).Conceptually, these two techniques are substitutable; i.e. the resulting decision from a NPV analysis is identical to the decision from an IRR analysis. In practice, however, the NPV and the IRR can, on occasion, produce conflicting decisions. Specifically, when analyzing mutually exclusive assets the Net Present Value can support one asset while the Internal Rate of Return supports the other. The purpose of this paper is twofold; first, to highlight structural deficiencies in the conventional application of the NPV and the IRR, and second, to demonstrate a procedure to correct for these structural errors.
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Meutia, Sri, and Suci Ramadhani. "ANALISIS KELAYAKAN INVESTASI PROYEK REHABILITASI PEMIPAAN INLET OUTLET KONDENSOR DI PT. INDONESIA POWER UJP PLTU PANGKALAN SUSU." Industrial Engineering Journal 9, no. 1 (April 20, 2020): 13. http://dx.doi.org/10.53912/iejm.v9i1.492.
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PT. Indonesia Power UJP PLTU Pangkalan Susu merupakan perusahaan yang bergerak dalam bidang pembangkitan tenaga listrik serta jasa operasi dan pemeliharaan dengan daya terpasang 2 x 200 MW. Pada umumnya perusahaan telah menerapkan metode study kelayakan investasi proyek yang ditinjau dari aspek finansial yaitu dengan cara menghitung nilai investasi dengan menggunakan perhitungan Internal Rate Of Return(IRR), Payback Period(PP), dan Cost Benefit Analysis(CBA). Selain menganalisis kelayakan investasi proyek pemipaan inlet outlet kondensor PT. Indonesia Power UJP PLTU ini juga selalu menganalisa kelayakan investasi proyek yang lainnya dengan menggunakan metode yang sama. Penelitian ini dilakukan dengan menghitung nilai investasi dari proyek pemipaan inlet outlet kondensor retur(IRR), ngan cara menghitung nilai Present Value Kas Bersih, Average rate Of Return(ARR), Net Present Value(NPV), Internal Rate Of Return(IRR), dan Profitability Index(PI). Dari hasil perhitungan yang telah dihitung didapatkan nilai kelayakan investasi yang ditinjau dari aspek finansial secara berturut turut adalah Rp. 1.727.845.392.701, Rp 103.452.495.100, Rp 1.713.300.392.701, dan 118,79 Kali. Sehingga dapat diambil kesimpulan bahwa investasi kelayakan proyek pemipaan inlet outlet kondensor di PT. Indonesia Power UJP PLTU Pangkalan Susu yang ditinjau dari aspek finansial dapat dinyatakan bahwa proyek tersebut layak untuk dijalankan
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Herlambang, Yudha. "APLIKASI MATEMATIKA NUMERIK UNTUK MENGHITUNG INTERNAL RATE OF RETURN DAN YIELD TO MATURITY OBLIGASI." EKUITAS (Jurnal Ekonomi dan Keuangan) 12, no. 4 (September 12, 2018): 497–515. http://dx.doi.org/10.24034/j25485024.y2008.v12.i4.203.
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This paper will present the application of numerical mathematic and discuss the alternative method to calculate and solve the problem about the value of Internal Rate Return (IRR) and desired returned rate by obligation investor. As we know there are several methods to solve the calculation about IRR ,such as Interpolation Method by using the financial table and Trial and Error Method by using IRR Function in Excel Software; but the most popular is Newton Raphson Method. In this method, the numerical case must be transferred into the NPV equation or obligation equation, and be created to the polynomial equation in term of f(x) until the error is minimum. This method gives the same result if it is compared with several methods mentioned above for the same case. There is only approximation of 4 digits in decimals for the result. By using this method, there are still any differences of calculation result, but it’s not significant. This numerical approach can be implemented to solve the value of desired interest rate from the obligation by using the same calculation step and algorithm.
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Herlambang, Yudha. "APLIKASI MATEMATIKA NUMERIK UNTUK MENGHITUNG INTERNAL RATE OF RETURN DAN YIELD TO MATURITY OBLIGASI." EKUITAS (Jurnal Ekonomi dan Keuangan) 12, no. 4 (February 2, 2017): 497. http://dx.doi.org/10.24034/j25485024.y2008.v12.i4.2091.
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This paper will present the application of numerical mathematic and discuss the alternative method to calculate and solve the problem about the value of Internal Rate Return (IRR) and desired returned rate by obligation investor. As we know there are several methods to solve the calculation about IRR ,such as Interpolation Method by using the financial table and Trial and Error Method by using IRR Function in Excel Software; but the most popular is Newton Raphson Method. In this method, the numerical case must be transferred into the NPV equation or obligation equation, and be created to the polynomial equation in term of f(x) until the error is minimum. This method gives the same result if it is compared with several methods mentioned above for the same case. There is only approximation of 4 digits in decimals for the result. By using this method, there are still any differences of calculation result, but it’s not significant. This numerical approach can be implemented to solve the value of desired interest rate from the obligation by using the same calculation step and algorithm.
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Onuma, Onuma E. "A Predictive Model for Determining Internal Rate Return (Irr) Without Trial and Error." IOSR Journal of Economics and Finance 08, no. 02 (April 2017): 62–66. http://dx.doi.org/10.9790/5933-0802036266.
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Keca, Ljiljana. "Assessment of cost-efficiency for wood production in poplar plantations in Ravan Srem, based on internal rate of return." Bulletin of the Faculty of Forestry, no. 102 (2010): 25–40. http://dx.doi.org/10.2298/gsf100621001k.
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The paper presents the commercial cost efficiency analysis of poplar plantations, according to project evaluation indicator in agriculture and forestry - internal rate of return (IRR). The analysis was performed for planting poplar clone I-214 in the area of Ravan Srem, planting space 6?6 m, with different rotations and on different soil types. The methodology, used in this paper refers to the implementation of the dynamic method of economic research, which explains the discount rate, according to which, the current value of cash flow will be equal to the current value of the cash outflaw. The research goal was to check the justifica?tion of funds invested in wood production in poplar plantations, based on revenues and cost analysis in different plantation ages, using the IRR. The research showed that the IRR for 12 sample plots varied in interval 4.32-6.94% with average rate of 5.63%. The internal rates are larger for plantations on good quality soil types, regarding of poplar plantation (aluvial semigleyic soil), and for shorter rotations and vice versa. The IRR values higher than 12% were not found in researched framework of cost-revenues changes rate. The sensitive analysis proved that the project is very easily affected by cost-revenues changes. .
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Mackevičius, Jonas, and Vladislav Tomaševič. "EVALUATION OF INVESTMENT PROJECTS IN CASE OF CONFLICT BETWEEN THE INTERNAL RATE OF RETURN AND THE NET PRESENT VALUE METHODS." Ekonomika 89, no. 4 (January 1, 2010): 116–30. http://dx.doi.org/10.15388/ekon.2010.0.962.
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Results obtained by employing the net present value (NPV) and the internal rate of return (IRR) methods allow to objectively determine the effectiveness and attractiveness of an investment project and to compare investment projects differing in scope, length or the amount of expected profit. While results obtained by the NPV and IRR methods normally correlate, contradictions are possible in individual cases. Such contradictions are called ‘conflict between the IRR and NPV methods’. The paper deals with the main characteristics of NPV and IRR, analysing the substance of the conflict and cases of its manifestation. A technique for the resolution of the NPV and IRR conflict is proposed.
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Mucsics, Laszlo F. "HARDSHIPS IN HUNGARIAN TERTIARY EDUCATION: THE ECONOMIC ROLE OF PRIVATE INTERNAL RATE OF RETURN IN ONLINE EDUCATION." Problems of Education in the 21st Century 53, no. 1 (April 15, 2013): 61–73. http://dx.doi.org/10.33225/pec/13.53.61.
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The effects of global crises and the unique Hungarian economic difficulties render more and more hardships for non-full time students of higher education. The aim of this study twofold. It gives insight into how the ICTs are spread among the students of Karoly Robert College between 2006 and 2012 and examines the economic effect of private internal rate of return (IRR) by launching a form of online education in the changing environment of Hungarian tertiary education. In general, the study found that the student population is equipped with the proper up-to-date technology that enables using online education. In addition, with launching online education the students’ private IRR may also be increased significantly by reducing the cost of indirect cost. With the technological inventions and applications of the 21st century the Karoly Robert College designs and introduces a new learning environment for non-full time students since 2013. Key words: e-education, structural reform, info-communication tools, private IRR to education.
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Suantari, Ni Made Ayu Manik, I. G. N. Apriadi Aviantara, and I. A. Rina Protiwi Pudja. "Analisis Kinerja Sistem Penggilingan Gabah Sebagai Penunjang Usaha Pertanian Berkelanjutan (Studi Kasus di Kecamatan Penebel, Kabupaten Tabanan)." Jurnal BETA (Biosistem dan Teknik Pertanian) 6, no. 2 (October 27, 2018): 112. http://dx.doi.org/10.24843/jbeta.2018.v06.i02.p08.
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Tujuan dari penelitian ini adalah untuk mengetahui kondisi kinerja mesin dari penggilingan gabah dan mengetahui berapa persen kapasitas yang terpakai dalam penggilingan gabah sehingga dapat mengukur dan menilai keberlanjutan dari produktivitas finansial pada usaha penggilingan gabah. Analisis keberlanjutan finansial menggunakan analisis menghitung NPV (Net Present Value), IRR (Internal Rate of Return), dan BCR (Benefit Cost Ratio). NPV (Net Present Value) adalah salah satu kriteria terpenting dalam evaluasi sebuah investasi, menunjukkan bahwa selisih jumlah kas yang dihasilkan proyek investasi dan nilai investasi yang diperlukan. IRR (Internal Rate of Return) adalah suatu investasi dapat dilakukan apabila laju pengembaliannya lebih besar daripada laju pengembalian investasi ditempat lain. BCR (Benefit Cost Ratio) merupakan suatu analisis yang diperlukan untuk melihat sudah sampai sejauh mana perbandingan antara nilai manfaat terhadap nilai biaya jika dilihat pada kondisi nilai saat ini PV (Present Value). Berdasarkan pada tabel Analisis kinerja operasional produktivitas didapatkan kontribusi terhadap kinerja pada PGK yaitu 21,1%, PGM 32.3% dan PGB 47,5%. Sehingga dalam penggilingan gabah berdasarkan hasil sampling rata-rata yang ada di Kecamatan Penebel untuk PGB mempunyai kontribusi terhadap kinerja operasional yang paling besar dan pada tabel kondisi kinerja mesin penggilingan gabah dalam Intensitas Operasi yang dikerjakan dimana pelaku usaha penggilingan gabah yaitu penggilingan kapasitas besar, menengah ini memiliki kegiatan investasi yang bisa dikatakan layak untuk dilanjutkan atau dikembangkan kembali namun tidak dengan kapasitas kecil karena penggilingan tersebut dikatakan tidak layak untuk dilanjutkan. Hal ini didasarkan pada hasil sampling rata-rata pada setiap kapasitas penggilingan gabah yang terpasang dengan analisis kelayakan finansial yaitu NPV (Net Present Value) yang setiap kapasitasnya berbeda yaitu kapasitas besar Rp. 306.400.273, kapasitas menengah Rp. 190.596.835 dan kapasitas kecil Rp. -15.890.115. IRR (Internal Rate of Return) kapasitas besar 48%, kapasitas menengah 24% dan kapasitas kecil 0.6%. B/C Ratio (Benefit Cost Ratio) kapasitas besar mendapatkan 2,18 dan kapasitas menengah mendapatkan 1,75 sedangkan kapasitas kecil hanya 1,0.
The purpose of this study are to know the condition og grain milling machine performance and to know the percentage of capacity used in the machine, thus can measure and assess the sustainability of the financial productivity of the grain milling business. Financial sustainability analyzes use NPV (Net Present Value), IRR (Internal Rate of Return), and BCR (Benefit Cost Ratio) calculations. NPV (Net Present Value) is one of the most important criteria in the evaluation of an investment, indicating that the difference in the amount of cash generated by the investment project and the value of the investment required. IRR (Internal Rate of Return) is an investment can be done if the rate of return is greater than the rate of return on investment at another place. BCR (Benefit Cost Ratio) is an analysis required to see how far the comparison between the value of benefits to the value of the cost when viewed at the current value of PV (Present Value). Based on the table of operational performance of productivity analysis, contribution to performance on small capacity is 21,1%, medium capacity is 32.3%, and large capacity is 47,5%. Therefore, based on the average sampling results in Penebel Sub-district, grain milling with large capacity has the greatest contribution to operational performance and on the table of grinding machine performance conditions in the Operation Intensity done where the grain milling business actors namely the milling of large, medium, capacity has investment activities that can be said worthy to be continued or developed again but not with a small capacity because the milling is said to be inappropriate to continu. Based on the average sampling result on each grain milling capacity installed with a financial feasibility analysis of NPV (Net Present Value) has different capacity where large capacity is Rp. 306.400.273, medium capacity is Rp. 190.596.835, and small capacity is Rp. -15.890.115. In IRR (Internal Rate of Return) large capacity is 48%, medium capacity is 24%, and small capacity is 0,6%. In B / C Ratio (Benefit Cost Ratio), large capacity is 2.18, medium capacity is 1.75, meanwhile small capacity is 1,0.
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Habir, Habir. "STUDI KELAYAKAN INVESTASI PADA PROYEK PENINGKATAN STRUKTUR JALAN MALINAU – LONG ALANGO." DEDIKASI 21, no. 1 (June 18, 2020): 94. http://dx.doi.org/10.31293/ddk.v21i1.4703.
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Before investors invest their capital, an investment feasibility analysis must be carried out for what research is carried out, namely to find out the capital that must be invested at this time in the hope of getting greater profits in the future. The NPV (Net Present Value) and IRR (Internal Rate of Return) methods are methods that are often used by investors to analyze the feasibility of an investment. The formulation of the problem in this paper is How much NPV (Net Present Value) and IRR (Internal Rate of Return) on the value of the project for the Improvement of the Malinau - Long Alango Road Structure of the East Kalimantan Provincial Public Works Department in the three years of 2012? How much NPV (Net Present Value) and IRR (Internal Rate of Return) if the project investment costs are obtained from bank loans?Based on the results of the analysis and discussion that if using NPV own capital is Rp. 873,203,421, 89 and IRR, which is 10.867%> 10%. While the capital using a loan from the NPV Bank was Rp. - 743,345,869, 83 <0, and IRR obtained by 9.25% <10%. means the investment appraisal of the project for the Improvement of the Malinau-Long Alango Road Structure for the Public Works Department of the East Kalimantan Province in the three regions of 2012 is feasible to do if it uses its own capital, and vice versa if all capital obtained from loans from banks is not feasible and must be reconsidered.
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Hidayat, Taufik. "ANALISA INVESTASI KEUANGAN DAN PENGARUHNYA TERHADAP KINERJA PERUSAHAAN SEKTOR PERHOTELAN." Emerging Markets : Business and Management Studies Journal 5, no. 2 (February 2, 2019): 67–88. http://dx.doi.org/10.33555/ijembm.v5i2.96.
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The study was conducted to analyze the hotel performance focusing on the financial aspect. This is critical for the hotel since they have done building renovation financed by the bank, therefore controlling the financial activities will assist the hotel debt return in the long run. The financial analysis used some tools such as Break Event Point (BEP), Internal Rate of Return (IRR), Revenue Cost Ratio (RCR), Return On Investment (ROI), Return On Equity (ROE), Cost Benefit Ratio (CBR) dan Profitability Index to measure the hotel’s performance. The result shows that NPV> 0 then investment with NPV Rp. 39.36 billion can be continued safely. The Break event point (BEP) is accepted for 8 years. The Internal Rate of Return (IRR) method is used to analyze the amount of interest that makes the cost of expenditure and income equal to the size of IRR Hotel XYZ 15.87%> 8.5% (interest deposit bank) where IRR> i (interest rate), so investment proposal accepted. The RCR (Revenue Cost Ratio) method is 1.17 in 2012, amounting to 1.20 in 2013 andamounting to 1.38 in 2014 which explains that R / C> 1 is profitable after the project. The ROI (Return on Investment) was explained that there was an increase in the ability of Hotels in obtaining operating profit from invested capital in all assets. ROE (Return on Equity) explained that there was an increase in the ability of XYZ Hotels to obtain net income from paid-up capital. The Profitability Index (PI) method of 1.656> 1 then the building renovation of the hotel can be continued and profitable.
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Sugama, Agum Setya, and Iwan Supriyadi. "ANALISIS KELAYAKAN INVESTASI RELOKASI TOL PORONGGEMPOL AKIBAT TAMBAHAN LINGKUP PEKERJAAN." Construction and Material Journal 2, no. 3 (December 29, 2020): 213–18. http://dx.doi.org/10.32722/cmj.v2i3.3530.
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ABSTRACTSurabaya–Gempol Toll Road is a toll that has operated since 1986, but in 2006 the Porong-Gempol route collapsed due to lapindo mud flow. Therefore, the toll road needs a relocation. On the construction of its relocation, additional scope of work was added and affected the feasibility of the investment which must be put into consideration for analyzing purposes in order to regain the initial feasibility value of 14.84% IRR. The forecast of cost and income analyzed with financial approach. The method used are Net Present Value (NPV) and Internal Rate of Return (IRR) with a discount rate of 11.8%. The result of investment feasibility after additional scope of work shows that the NPV during concession period (39 years) is negative Rp459.150.000.000,00 and IRR at NPV = 0 is 9,55%. To return the feasibility value, concession period is must be increase to 50 years with adjustment of the toll fee to Rp1.625 in 2021 and Rp1.980 in 2023. It shows that NPV is Rp1.037.727.000.000,00 and IRR at NPV = 0 return to 14,84%.Keywords: Additional scope of work; Compensation; Feasibility; RelocationABSTRAKJalan Tol Surabaya-Gempol merupakan jalan tol yang sudah beroperasi sejak tahun 1986 akan tetapi pada tahun 2006 ruas tol Porong-Gempol terputus oleh lumpur lapindo sehingga perlu dilakukan relokasi. Dalam pembangunan relokasi ruas tol tersebut, terjadi tambahan lingkup pekerjaan sehingga membuat biaya investasi membengkak sehingga perlu diketahui pengaruhnya terhadap nilai kelayakan investasi proyek tersebut untuk kemudian dilakukan analisis dalam upaya pengembalian nilai kelayakan yaitu IRR sebesar 14,84% seperti kondisi awal. Prakiraan biaya dan pendapatan akan dianalisis dengan pendekatan finansial. Metode yang digunakan adalah Net Present Value (NPV) dan Internal Rate of Return (IRR) dengan discount rate 11,8%. Hasil evaluasi kelayakan investasi akibat tambahan lingkup pekerjaan menunjukkan bahwa NPV selama masa konsesi (39 tahun) adalah negatif Rp459.150.000.000,00 dan IRR pada NPV = 0 adalah 9,55%, nilai IRR ini lebih kecil dari discount rate yaitu 11,8%. Untuk mengembalikan nilai kelayakan, dilakukan skema kompensasi penambahan masa konsesi menjadi 50 tahun dan penyesuaian tarif tol baru menjadi Rp1.625,00 pada tahun 2021 dan Rp1.980,00 pada tahun 2023. Hasil dari skema kompensasi tersebut menunjukkan bahwa NPV sebesar Rp1.037.727.000.000,00 dan IRR pada NPV = 0 kembali ke nilai 14,84%.Kata kunci: Kelayakan; Kompensasi; Relokasi; Tambah Lingkup
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Lopez-de-Silanes, Florencio, Ludovic Phalippou, and Oliver Gottschalg. "Giants at the Gate: Investment Returns and Diseconomies of Scale in Private Equity." Journal of Financial and Quantitative Analysis 50, no. 3 (June 2015): 377–411. http://dx.doi.org/10.1017/s0022109015000113.
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AbstractWe document the wide dispersion of private equity investment returns and examine performance determinants using a newly constructed database of 7,500 investments worldwide. One in 10 investments does not return any money, whereas 1 in 4 has an internal rate of return (IRR) above 50%. Quick flips are associated with the highest returns. Performance does not appear scalable: Investments held by private equity firms in periods with a high number of simultaneous investments underperform substantially. Results are consistent with the theoretical literature on organizational diseconomies linked to firm structure. Private equity firms’ actions do not appear to be mechanical or easily scalable.
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Ma, Xinxin, and Chengcheng Zhang. "Higher Education Expansion and Return to Education in China: Evidence from CGSS2005 and CGSS2013." International Journal of Financial Research 8, no. 3 (June 12, 2017): 85. http://dx.doi.org/10.5430/ijfr.v8n3p85.
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We conducted an empirical study to estimate the private internal rate of return to years of schooling (IRR) in China during the period after the implementation of higher education expansion policy using data from the Chinese General Social Survey data conducted in 2006 and 2014 (CGSS2005, CGSS2013). The major conclusions are as follows: first, from 2005 to 2013, IRR decreased from 8.6% to 7.8% for the whole sample, IRR decreased from 8.3% to 7.4% for men, and IRR decreased from 9.0% to 8.2% for women. Second, IRR values among various education category groups are different. IRR is greater for the high-level education group than that for the middle and low-level education groups in both 2005 and 2013. Third, to consider the impact of the higher education expansion policy on IRR, the IRR of the university graduates decreased from 15.4% (2005) to 11.2% (2013), whereas the IRR of the graduate school graduates rose from 10.1% (2005) to 19.0% (2013). The effect of the policy on IRR differs between the university and graduate school graduates. Fourth, the IRR is higher for women than for men. There is a gender disparity for IRR; IRR is different by ownership types, registration system types, industrial and regional groups in both 2005 and 2013.
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Muryati, Muryati, and Kasyati Yunita W. "Analisa Kelayakan Finansial Usaha Internet Wireles pada Multinet Aircom Muara Bulian." Eksis: Jurnal Ilmiah Ekonomi dan Bisnis 10, no. 2 (January 31, 2020): 81. http://dx.doi.org/10.33087/eksis.v10i2.166.
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This research aims to analyze the financial feasibility of Wireles Internet at Multinet Aircom Muara Bulian in Muara Bulian. Using the analysis of investment criteria Net Present Value (NPV), Net B/C Ratio, Internal Rate Of Return (IRR) and Payback Pariod. Results of the calculation of Internet business eligibility criteria wireles on Multinet Aircom in Muara Bulian obtained the calculation result of Net Present Value (NPV) of Rp. 106,357,720,-indicating that the Internet business investment wireles on Multinet Aircom in Muara Bulian give a profit of Rp. 106,357,720,-results Net Benefit Cost Ratio (Net B/C) obtained by 2.1 > 1, this indicates that for each current value of the expenditure of Rp. 1,-will provide benefits amounting to Rp. 2.1. The result of Internal Rte Of Return (IRR) calculation obtained by 22% greater than the prevailing interest rate of 12% it shows that wireles internet business is feasible to run because IRR is greater than the prevailing bank interest rate. The result of calculation of return on investment (Payback Pariod) in Internet business Wireles indicates that the business is gaining a return on investment for 2 years 9 months 28 days means in that period the cost of investment incurred can be returned, so the faster the period of refund of investment costs, then the effort is carried out better.
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Aldeseit, Bassam. "Evaluating Financial Viability of Olive Mills Enterprise in Jordan." Journal of Agricultural Science 6, no. 4 (March 15, 2014): 173. http://dx.doi.org/10.5539/jas.v6n4p173.
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The main aim of this study was to evaluate financial viability of olive oil mills enterprise. Thirty olive mills were investigated. A questionnaire was designed to obtain information from mills owners. The information obtained was mainly related to costs and returns. Cash flows were derived from costs and returns items of the enterprise. Three main discounted measures of project worth were used; these were Net Present Value (NPV), the Internal Rate of Return (IRR), and the Benefit Cost Ratio (B/C). The results of this study revealed that olive mills could be a viable encouraging, and profitable enterprise because of its capability to generate a highly positive and acceptable NPV (837966.05 JDs). The IRR (85%) and B/C ratio (2.3) values for this enterprise were economically accepted.
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Sung, Sanghyun, and Wooyong Jung. "Economic Competitiveness Evaluation of the Energy Sources: Comparison between a Financial Model and Levelized Cost of Electricity Analysis." Energies 12, no. 21 (October 27, 2019): 4101. http://dx.doi.org/10.3390/en12214101.
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The levelized cost of electricity (LCOE) is used widely to compare the economic competitiveness of the energy mix. This method is easy to understand and simple to apply, which makes it preferable for many energy policymakers. However, the method has several disadvantages from the energy business perspective. First, the LCOE approach does not consider revenue, and a high-interest rate usually correlates with the tariff growth rate. Thus, if a high-interest rate increases the cost, that high rate increases the revenue, which can affect economic competitiveness. Second, the LCOE does not consider different stakeholders. Equity investors and loan investors have different interests depending on different financial indicators, which influence the same energy sources’ differential economic attractiveness. This study analyzes and compares the LCOE, Project Internal Rate of Return (Project IRR), Equity Internal Rate of Return (Equity IRR), and Debt Service Coverage Ratio (DSCR) of an illustrative wind, coal, and nuclear power project using Monte-Carlo simulations. The results show that energy sources’ economic competitiveness can vary depending on financial indicators. This study will help energy policymakers develop more economically realistic energy portfolios.
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Sudarso, Kustamar, and Lies Kurniawati Wulandari. "OPTIMASI KOMPOSISI TIPE RUMAH DENGAN PROGRAM QM (Quantitative Analysis for Management) UNTUK MENENTUKAN STUDI KELAYAKAN PERUMAHAN KITANARA REGENCY JOMBANG." INFOMANPRO 9, no. 2 (October 14, 2020): 40–43. http://dx.doi.org/10.36040/infomanpro.v9i2.3179.
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Dengan pertumbuhan jumlah penduduk Jombang yang tinggi maka akan menyebabkan meningkatnya permintaan akan rumah tempat tinggal. Perumahan Kitanara regency yang terletak di jalan Raya Seruni Pulo Lor Desa pulo Jombang menawarkan hunian sebanyak 61 unit rumah yang mana rumahnya terdiri dari 19 buah rumah tipe A, 31 buah rumah tipe C dan 11 buah rumah tipe C. Kelayakan dari perumahan Kitanara Regency menyatakan NPV sebesar Rp 6.155.903.283, BCR sebesar 1,94. dan IRR sebesar 17%. Dengan adanya evaluasi akan dipergunakan untuk mengetahui komposisi bangunan rumah pada proyek pembangunan perumahan Kitanara regency apa sudah optimal seiring dengan permintaan pasar saat ini. Di evaluasi ini membahas beberapa aspek yaitu aspek optimasi dengan metode simpleks, aspek pasar dengan metode deskriptif kualitatif, aspek teknis dengan metode deskriptif kualitatif dan aspek finansial dengan metode estimasi. Di evaluasi ini dipergunakan parameter parameter kelayakan seperti Net Present Value (NPV), Benefit Cost Ratio (BCR) dan Internal Rate of Return (IRR). Penelitian ini menghasilkan jumlah komposisi optimal rumah untuk tipe A, tipe B dan tipe C masing masing berjumlah 16 ; 33 dan 12 buah. Dari analisis finansial berdasarkan komposisi rumah tersebut menghasilkan nilai Net Present Value (NPV) sebesar Rp 7.613.270.783 > NPV existing, Nilai Benefit Cost Ratio 1,94 (BCR) >1,65 BCR existing dan Nilai Internal Rate of Return (IRR) sebesar 17 = IRR existing.
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Fitrio, Tomy. "STUDI KELAYAKAN INVESTASI PEMBELIAN KAPAL TONGKANG CV. SURYA SAMUDRA SENTOSA." Jurnal Manajemen dan Bisnis 7, no. 3 (September 30, 2018): 94–103. http://dx.doi.org/10.34006/jmbi.v7i3.136.
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Tujuan penelitian ini untuk mengetahui kelayakan Finansial Investasi Tongkang baru pada CV. Surya Samudra Sentosa. Adapun alat analisis yang digunakan dalam penelitian ini adalah dengan menggunakan Studi Kelayakan Aspek Keuangan yaitu dengan metode Net Present Value (NPV), Benefit Cost Ratio (B/C), dan Internal Rate of Return (IRR). Kesimpulan hasil dari penelitian ini menunjukan bahwa dari hasil analisis didapatkan NPV sebesar Rp. 2.434.504.000,- yang berarti pembuatan Tongkang baru di CV. Surya Samudra Sentosa layak dijalankan karena NPV menunjukkan angka Positif. Analisis menggunakan Benefit Cost Ratio (B/C), diperoleh nilai Benefit Cost Ratio (B/C) sebesar 1,39 > 1, artinya pembuatan Tongkang baru di CV. Surya Samudra Sentosa layak dijalankan. Dengan menggunakan metode Internal Rate of Return (IRR) didapatkan hasil sebesar 25,86% yang berarti lebih besar dari tingkat suku bunga saat ini yaitu 17 % pertahun, maka pembuatan Tongkang di CV. Surya Samudra Sentosa layak dilaksanakan.
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DeBoeuf, David, Hongbok Lee, Don Johnson, and Maksim Masharuev. "Purchasing power return, a new paradigm of capital investment appraisal." Managerial Finance 44, no. 2 (February 12, 2018): 241–56. http://dx.doi.org/10.1108/mf-07-2017-0265.
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Purpose The purpose of this paper is to contribute to financial managers’ capital budgeting decision-making processes by proposing a new paradigm of capital investment appraisal. The expected return, required return structure of the proposed purchasing power return (PPR) methodology eliminates the many flaws associated with the competing internal rate of return (IRR) and modified IRR (MIRR) techniques. Design/methodology/approach The authors provide a new framework for examining long-term investment projects through a percentage return prism. Unlike that of IRR and MIRR, mathematical consistency with net present value (NPV) is a design requirement. Findings PPR eliminates the many flaws found in the IRR and MIRR methodologies, is mathematically consistent with NPV, and identifies positive-NPV investments forecasted to reduce the company’s purchasing power. These projects are acceptable under NPV, but flagged for additional review and potential rejection. Created to examine projects on a percentage return basis, PPR employs market-based inflation rates to convert all cash flows into constant purchasing power units of measure. From these units, an expected real return is estimated and compared to the project’s inflation-adjusted required return, resulting in an accept/reject decision consistent with that of NPV. Originality/value The proposed PPR is a new paradigm of capital investment appraisal that eliminates the many problems found in the IRR and MIRR techniques, is mathematically consistent with the NPV method, and helps financial decision makers examine investment projects on an expected percentage return basis. PPR also flags for further review projects expected to actually reduce the company’s purchasing power.
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Nofiyanti, Nofa, Bambang Sunarko, and Ekaningtyas Widiastuti. "ANALISIS KELAYAKAN INVESTASI DALAM RANGKA EKSPANSI (STUDI KASUS PADA PDAM TIRTA SATRIA KABUPATEN BANYUMAS)." Performance 23, no. 1 (August 16, 2017): 1. http://dx.doi.org/10.20884/1.performance.2016.23.1.285.
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This research study is a case study conducted in PDAM Tirta Satria Kabupaten Banyumas. This research entitled “Invesment Feasibility Analysis in the Context Ex-pansion (Case Study of PDAM Tirta Satria Kabupaten Banyumas)”. The objective of this research study is to determine the expansion in fixed assets that will conducted by PDAM Tirta Satria Kabupaten Banyumas feasible in the term of Internal Rate of Return (IRR) and Payback Period methods. Population and sample in this research is PDAM Tirta Satria Kabupaten Banyumas, using boring sampling as a sampling method.The result of the research showed: the investment in order to expand the addition of fixed assets that will be run by PDAM Tirta Satria Kabupaten Banyumas feasible by considering the results of the analysis Internal Rate of Return method of 21% which greater than the cost of capital that has been determined of 10% (IRR>k) and Payback Period method, the investment will show a time for 4 years and 8 months 26 days to capital return on investment so that investment is feasible.
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BERMIN, HANS-PETER, and GARETH WILLIAMS. "ON CASH SETTLED IRR-SWAPTIONS AND MARKOV FUNCTIONAL MODELING." International Journal of Theoretical and Applied Finance 20, no. 02 (March 2017): 1750009. http://dx.doi.org/10.1142/s0219024917500091.
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In this paper, we show how to consistently price cash settled Internal Rate of Return (IRR)-swaptions and derivatives on these contracts. There are several results worth highlighting. First, if we know at what fixed coupon an IRR-swap values to par, we can compute the price of any IRR-swaption in a way consistent with absence of arbitrage. We show that this fixed coupon, denoted the IRR-forward, carries an additional convexity adjustment. The size of the adjustment depends mainly on the shape of the volatility surface but also on the skew of the forward. The largest convexity adjustments are seen for IRR-forwards referencing long tenors and long expiries. Second, we show that any Markov functional technique, relating a given term-structure model to the market observed IRR-swaptions, should be carried out with respect to the corresponding forward measure. The modification of the forward swap rate is further shown to consistently value the fixed and the floating leg of the underlying IRR-swap correctly.
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Dwi Ajiatmo. "Analisis Perencanaan Investasi Jaringan Tenaga Listrik." Jurnal JEETech 1, no. 2 (October 24, 2020): 1–5. http://dx.doi.org/10.48056/jeetech.v1i2.11.
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Electricity is able to make a positive change and contribution to people's lives and well-being. This study aims to assess the feasibility of investment in the construction of low voltage electricity networks. The method used with project evaluation analysis is based on financial analysis. The criteria used to analyze activities carried out for 10 years use payback period (PP) analysis, net present value (NPV), internal rate of return (IRR), and profitability index (IP). The results showed that the analysis of investment planning can be carried out with the consequence of the results obtained in the form of not so large returns. PP results show the investment value with the payback period method will Return in the 9th year, while the positive NPV value is still above zero while the IRR value shows the value of 11% below the social discount rate as well as the IP value showing the value of 0.90. The feasibility of investment in terms of economic-financial analysis by looking at per criteria shows that investment is still feasible to be carried out with minimal profit levels.
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Muhammad, Andi Haris, Daeng Paroka, Sabaruddin Rahman, and `. Syarifuddin. "TINGKAT KELAYAKAN OPERASIONAL KAPAL PERIKANAN 30 GT PADA PERAIRAN SULAWESI (STUDI KASUS KM INKA MINA 957) The Operational Feasibility Level of 30 GT Fishing Vessel in Sulawesi Waters (case study of KM INKA MINA 957)." Marine Fisheries : Journal of Marine Fisheries Technology and Management 9, no. 1 (May 29, 2018): 1. http://dx.doi.org/10.29244/jmf.9.1.1-9.
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<p><em>The ability of a vessel to obtain catches is known as fishing vessel productivity. This greatly influences the feasibility level of the fishing operation. The objctive of the study is to evaluate the operational feasiblity level of 30 GT fishing vessel that operates in Sulawesi waters (case study INKA MINA 957). The use of Net Present Value (NPV) and Internal Rate of Return (IRR) methods showed that the catch should be of more than minimum 116 ton per year or the NPV value at Rp. 124.797.638,- with 10% interest rate assumption within 10 years. Furthermore, based on the internal rate of return (IRR) the interest obtained was approximately 12.2% which was higher than the market interest rate assumptions at about 2.2%</em><em>.</em> <em></em></p><p><strong><em>Keywords:</em></strong><strong><em> </em></strong><em>fishing vessel, operational feasibility, NPV and IRR</em></p><p align="center"><strong>ABSTRAK</strong></p><p class="Abstrakisi">Produktivitas kapal perikanan adalah kemampuan kapal untuk memperoleh hasil tangkapan ikan. Produktivitas ini sangat mempengaruhi tingkat kelayakan operasional. Penelitian ini bertujuan untuk mengukur tingkat kelayakan operasional kapal perikanan 30 GT yang beroperasi di perairan Sulawesi (studi kasus KM INKA MINA 957). Metode <em>Net Present Value (NPV)</em> dan <em>Internal Rate of Return (IRR)</em> telah digunakan untuk mengukur tingkat kelayakan operasional. Hasil analisis menunjukkan bahwa kapal perikanan layak dioperasikan dengan prediksi hasil tangkapan minimal sebesar 116 ton pertahun atau nilai <em>NPV</em> sebesar Rp.124.797.638,- dengan asumsi suku bunga 10% selama 10 tahun. Selanjutnya berdasarkan Metode <em>IRR</em> diperoleh suku bunga 12,2%, hasil ini lebih besar 2,2% sebagaimana asumsi suku bunga dipasaran.</p><p><em><strong>Kata kunci:</strong> kapal perikanan, kelayakan operasional, <em>NPV</em> dan <em>IRR</em><br /></em></p>
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Homagain, Krish, Chander Shahi, Nancy Luckai, Mathew Leitch, and F. Wayne Bell. "Benefit–cost Analysis of Vegetation Management Alternatives: An Ontario Case Study." Forestry Chronicle 87, no. 02 (April 2011): 260–73. http://dx.doi.org/10.5558/tfc2011-013.
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Vegetation management practices are an integral component of forest management. In this paper, we report results of stand-level benefit–cost analyses of 12 vegetation management treatments applied at six study sites in northern Ontario. Forest Vegetation Simulator (FVSOntario) was used to project gross total and merchantable volumes to 70 years of age, and BUCK-2 was used to optimize potential products. Net present value (NPV), benefit–cost ratio (BCR), and internal rate of return (IRR) were calculated using 2009 constant dollars and variable real discount rates. Aerial herbicide treatments produced the highest NPV, BCR, and IRR. Internal rates of return of 4.32%, 2.90%, 2.82% and 2.50% for aerial herbicide, manual brush cutting, ground-applied herbicide, and brush cutting plus herbicide treatments, respectively, indicated that all of the vegetation management alternatives evaluated are economically viable.
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Ruswaji, Ruswaji, and Puguh Cahyono. "ANALYSIS OF BUSINESS FEASIBILITY OF BANANA CHIPS." JHSS (JOURNAL OF HUMANITIES AND SOCIAL STUDIES) 4, no. 2 (September 30, 2020): 197–200. http://dx.doi.org/10.33751/jhss.v4i2.2503.
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In this study, the method used is the Net Present Value (NPV) method, Internal Rate of Return (IRR), Payback Period (PP) and Break Event Point (BEP). The results of the study show that the net present value (NPV) is Rp. 31,024,617, - and is feasible because the NPV> 0, the Internal Rate of Return (IRR) of 8.25% is feasible because it is greater than the deposit interest value applicable to for the bank at this time, the Payback Period (PP) of 2 months is feasible because it is still smaller than the investment period, and the Break Event Point (BEP) of Rp.44,828,693 is feasible because the business is not profitable and does not lose if it earns income. amounting to Rp. 44,828,693, - The banana chip entrepreneurs still maintain the drying of banana chips by using solar energy, because the considerations of raw material prices and production and marketing costs are very sensitive to affect sales and profits.
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Marcell, Geraldy, and Hendrik Sulistio. "PERBANDINGAN INVESTASI DENGAN SEWA ALAT BERAT PADA PROYEK PEMBANGUNAN HOTEL IBIS RADEN SALEH JAKARTA." JMTS: Jurnal Mitra Teknik Sipil 4, no. 1 (February 1, 2021): 313. http://dx.doi.org/10.24912/jmts.v0i0.10480.
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The Ibis Raden Saleh Hotel's construction project by PT Andal requires the use of heavy equipment as a supporting factor for development. Heavy equipment reviewed in this study are excavators, dump trucks, and tower cranes. The research carried out wants to consider investment or heavy equipment rental whether it is feasible or not feasible as a decision making. This study's data collection method is the interview method as primary data and documentation as secondary data. Methods of data analysis using financial analysis, namely NPV (Net Present Value), IRR (Internal Rate of Return), BCR (Benefit Cost Ratio), and PBP (Payback Period). From the calculation results, the NPV value of investment is - IDR 12,216,701,317.38 and the NPV value for rent is IDR 16,083,224,759.60. The IRR value for investment is 0% and the IRR value for rent is 22.28%. The BCR value for investment is 0.62 and the BCR value for lease is 4.81. The PBP value for investment cannot yet be assessed and the PBP value for the lease is 5.0596 months. From this research, it can be concluded that a feasible activity is heavy equipment rental. ABSTRAKProyek konstruksi Hotel Ibis Raden Saleh oleh PT Andal membutuhkan pemakaian alat berat sebagai salah satu faktor penunjang pembangunan. Alat berat yang ditinjau pada penelitian ini adalah excavator, dump truck, dan tower crane. Penelitian dilakukan untuk mempertimbangkan pemilihan antara investasi atau sewa alat berat menguntungkan atau tidak menguntungkan untuk dilakukan sebagai pengambilan keputusan. Metode pengumpulan data yang digunakan pada penelitian ini adalah metode wawancara sebagai data primer dan dokumentasi sebagai data sekunder. Metode analisis data menggunakan studi analisis finansial yaitu NPV (Net Present Value), IRR (Internal Rate of Return), BCR (Benefit Cost Ratio), dan PBP (Payback Period). Berdasarkan hasil perhitungan didapatkan nilai NPV untuk investasi sebesar – Rp 12,216,701,317.38 (NPV < 0) dan nilai NPV untuk sewa sebesar Rp 16,083,224,759.60 (NPV > 0). Besaran nilai IRR untuk investasi sebesar 0% (IRR < MARR) dan nilai IRR untuk sewa sebesar 22.28%. (IRR > MARR). Besaran nilai BCR untuk investasi sebesar 0.62 (BCR< 1) dan besaran nilai BCR untuk sewa sebesar 4.81 (BCR > 1). Besaran nilai PBP untuk investasi belum dapat dinilai (PBP > umur proyek) dan besaran nilai PBP untuk sewa adalah 5.0596 bulan (PBP < umur proyek). Berdasarkan penelitian, dapat disimpulkan kegiatan yang menguntungkan dilakukan adalah sewa alat berat.
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Park, Moonseo, Yongsik Chu, Hyun-Soo Lee, and Wooyoung Kim. "EVALUATION METHODS FOR CONSTRUCTION PROJECTS." JOURNAL OF CIVIL ENGINEERING AND MANAGEMENT 15, no. 4 (December 31, 2009): 349–59. http://dx.doi.org/10.3846/1392-3730.2009.15.349-359.
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Financial evaluation methods such as Net Present Value (NPV) and Internal Rate of Return (IRR) are not fully adequate for accounting three practical aspects of construction projects: reinvestment rate, actual amount of required investment, and firm available funds. In a certain type of projects, this inadequacy often results in the inapplicability of NPV, multiple or no IRR problem, systematic bias of IRR, and inconsistent decision signal and ranking between NPV and IRR. Many modified methods have been developed, but hardly succeeded in reflecting construction market reality in an integrated manner. To address this issue, Project Present Value, Project Rate of Return, and Firm Rate of Return are proposed together with an investment decision framework. The proposed methods are designed to be free from all those problems, while incorporating market reality in them. As a result, construction practitioners would have more reliable and economically meaningful decision tools, which lead to the success of their projects. Santrauka Finansiniai įvertinimo metodai, kaip dabartinės vertės (DV) arba vidinės grąžos (VG), neadekvačiai vertina tris praktinius statybos projektų aspektus: reinvestavimo greitį, tikrąjį investicijų ir kapitalo poreikį. Dėl to neadekvatumo tam tikrai projektų rūšiai minėtųjų metodų iš viso neįmanoma pritaikyti. Sukurta daug modifikuotų metodų, tačiau jie sunkiai atspindi statybos rinkos tikrovę integruota forma. Tam pasiūlyta investicinių sprendimų sistema, į kurią integruoti trys metodai: dabartinės projekto vertės, projekto vidinės grąžos ir įmonės apyvartumo. Pasiūlytieji metodai gali įvertinti rinkos realybę. Dabar statybos gamybininkai turės patikimesnes ekonomiškai reikšmingas priemones sprendimams priimti ir galės sėkmingiau įgyvendinti savo projektus.
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Zakiyah, Tuti. "Metode Penilaian Investasi dengan Analisis Sensitivitas Pada Pendirian UMKM Premier Crepes." Jurnal Ilmiah Akuntansi dan Keuangan 7, no. 2 (May 19, 2018): 150–63. http://dx.doi.org/10.32639/jiak.v7i2.194.
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ABSTRACTThe main purpose of the investment is to earn a profit or a high rate of return. That is, no investor wants to lose even loss of funds or capital that has been invested in certain instruments. Well, to make no mistake in taking investment decisions, obligatory for investors to conduct investment feasibility analysis. Investment feasibility can not be judged solely on the basis of assumptions or beliefs, but must be analyzed in depth from various aspects. Without careful consideration, investing is like buying a cat in a sack. That is, investors do not know clearly whether the investment is profitable or not. Sensivitas analysis is an analysis conducted to determine the effect of changes in production parameters on changes in production system performance in generating profit. By conducting a sentiment analysis then the likely effect of these changes can be known and anticipated beforehand. An approach based on the Cash flow concept of Payback Period Method, Net Present Value (NPV) Method and Internal Rate of Return (IRR) Method. Minimum Acceptable Rate of Return or Minimum Atractive Rate of Return (MARR). MARR is the minimum rate of return on an investment that a brave investor would undertake.Keywords : NPV, IRR, MARR, sensitivity.
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Zakiyah, Tuti. "Metode Penilaian Investasi dengan Analisis Sensitivitas Pada Pendirian UMKM “Premier Crepes”." Jurnal Ilmiah Akuntansi dan Keuangan 7, no. 2 (November 17, 2018): 43–56. http://dx.doi.org/10.32639/jiak.v7i2.273.
Full textAbstract:
The main purpose of the investment is to earn a profit or a high rate of return. That is, no investor wants to lose even loss of funds or capital that has been invested in certain instruments. Well, to make no mistake in taking investment decisions, obligatory for investors to conduct investment feasibility analysis. Investment feasibility can not be judged solely on the basis of assumptions or beliefs, but must be analyzed in depth from various aspects. Without careful consideration, investing is like buying a cat in a sack. That is, investors do not know clearly whether the investment is profitable or not. Sensivitas analysis is an analysis conducted to determine the effect of changes in production parameters on changes in production system performance in generating profit. By conducting a sentiment analysis then the likely effect of these changes can be known and anticipated beforehand. An approach based on the Cash flow concept of Payback Period Method, Net Present Value (NPV) Method and Internal Rate of Return (IRR) Method. Minimum Acceptable Rate of Return or Minimum Atractive Rate of Return (MARR). MARR is the minimum rate of return on an investment that a brave investor would undertake.Keywords : NPV, IRR, MARR, sensitivity.
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De Albornoz, Vicente, Antonio Galera, and Juan Millán. "Is It Correct to Use the Internal Rate of Return to Evaluate the Sustainability of Investment Decisions in Public Private Partnership Projects?" Sustainability 10, no. 12 (November 23, 2018): 4371. http://dx.doi.org/10.3390/su10124371.
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Public Private Partnerships (PPP) are viewed by the private sector as investment projects. An investment criterion, such as the internal rate of return (IRR), widely used by practitioners, is thus necessary in order to determine if the opportunity is sustainable from an economic point of view and worth pursuing. However, a cash flow may have multiple IRRs—is it appropriate in the context of PPPs to use this criterion? This paper provides a clear proposition to determine the potential number of real positive IRRs a cash flow may have, depending on the number of sign variations and the value of the net present value (NPV) calculated with a discount rate equal to 0 (NPV(r = 0)). This proposition can sometimes be used when other tests (such as Norstrom’s Criterion) are inconclusive to determine if a cash flow has a single real positive IRR. The proposition is generally met by the typical cash flow of a PPP project, validating the use of IRR as an investment criterion.
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Jurnal, Redaksi Tim. "STUDI KELAYAKAN PEMBANGUNAN PEMBANGKIT LISTRIK TENAGA UAP 2X50 MW DENGAN MENGGUNAKAN BOILER CIRCULATING FLUIDIZED BED COMBUSTION DI KENDARI, SULSELRABAR." Energi & Kelistrikan 9, no. 2 (November 23, 2018): 147–56. http://dx.doi.org/10.33322/energi.v9i2.46.
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This research is an explanation from feasibility study of the project; Which aims to analyze the feasibility of financially the development of Power Plant (PLTU) Capacity 2 × 50 MW by using boiler circulating fluidized bed combustion (CFB). Indicators used to analyze the feasibility of Power Plant (PLTU) Capacity 2 × 50 MW are: payback period, net present value (NPV), internal rate of return (IRR), sensitivity analysis, variable operating costs, and fixed operating costs. This research analyzes investment feasibility and risk from financial aspect by considering interest rate of loan (in USD) equal to 6% per year. The calculation of the value of investments made amounted to 1074.63 USD / kW, and net present value (NPV) of 61.8270 million USD with an internal rate of return (IRR equity) of 14 percent, and the results of this study has also been calculated payback period (PP) during 6.69 years, very feasible, because it is shorter than the project age (30 years); Then it can be concluded that the tariff of selling electricity after levelized is 8.1582 Cent US $
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Yusuf, M., Dyah Wahyuning Aspriati, and Ratna Kumala Dewi. "Evaluasi Kelayakan Usaha Penggemukan Domba dan Kambing Milik H. Sholeh Berdasarkan Aspek Finansial dan Nonfinansial di Desa Banyutengah Kecamatan Panceng Kabupaten Gresik." International Journal of Animal Science 2, no. 04 (November 1, 2019): 98–103. http://dx.doi.org/10.30736/ijasc.v2i04.53.
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Penelitian dilaksanakan di peternakan milik Bapak H. Sholeh di Desa Banyutengah, Kecamatan Panceng, Kabupaten Gresik. Waktu penelitian dilaksanakan selama empat bulan yaitu bulan Januari 2015 hingga April 2015. Penelitian ini menggunakan kriteria kelayakan usaha dari aspek nonfinansial dan kelayakan aspek finansial dari kriteria investasi yaitu Net Present Value (NPV), Net Benefit Cost Ratio (NetB/C), Internal Rate of Return (IRR),Payback Period (PP). Dari hasil penelitian evaluasi kelayakan usaha domba dan kambing milik H. Sholeh berdasarkan aspek non finansial yang layak untuk dijalankan adalah aspek pasar, aspek hukum, aspek sosial dan ekonomi, dan aspek lingkungan, sedangkan aspek manajemen belum layak untuk dijalankan. Evaluasi kelayakan usaha berdasarkan aspek finansial layak dijalankan karena NPV lebih besar dari nol yaitu sebesar 1.157.000 rupiah dengan umur usaha delapan tahun. Nilai Net Benefit Cost Ratio (Net B/C) lebih besar dari satu yaitu 1,08. Nilai Internal Rate of Return (IRR) adalah 9,18 persen, lebih tinggi dari tingkat Discount Rate (DR) yang ditentukan yaitu 7 persen. Payback Period (PP) yang dihasilkan dari analisis tersebut adalah delapan tahun atau sama dengan umur ekonomis usaha yaitu delapan tahun.
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TEE, CHYNG WEN, and JEROEN KERKHOF. "A UNIFIED MARKET MODEL FOR SWAPTIONS AND CONSTANT MATURITY SWAPS." International Journal of Theoretical and Applied Finance 24, no. 04 (June 2021): 2150026. http://dx.doi.org/10.1142/s0219024921500266.
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Internal-rate-of-return (IRR) settled swaptions are the main interest rate volatility instruments in the European interest rate markets. Industry practice is to use an approximation formula to price IRR swaptions based on Black model, which is not arbitrage-free. We formulate a unified market model to incorporate both swaptions and constant maturity swaps (CMS) pricing under a single, self-consistent framework. We demonstrate that the model is able to calibrate to market quotes well, and is also able to efficiently price both IRR-settled and swap-settled swaptions, along with CMS products. We use the model to illustrate the difference in implied volatilities for IRR-settled payer and receiver swaptions, the pricing of zero-wide collars and in-the-money (ITM) swaptions, the implication on put-call parity, and the issue of negative vega. These findings offer important insights to the ongoing reform in the European swaption market.
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Pasaribu, Ali Musa. "ANALISIS FINANSIAL TEKNOLOGI BUDIDAYA UDANG WINDU (Penaeus monodon) DI JAWA TIMUR." Jurnal Penelitian Perikanan Indonesia 2, no. 1 (April 10, 2017): 55. http://dx.doi.org/10.15578/jppi.2.1.1996.55-59.
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Tujuan penelitian ini adalah untuk menilai kelayakan finansial teknologi budidaya udang windu oleh petani/penguaaha swasta yaitu berdasarkan kriteria: Net Present Volue (NPV), Net Benefit. Cost Ratio (Net B/C), dan Internal Rate of Return (IRR). Daerah penelitian adalah Propinsi Jawa Timur dengen jumlah sampel sebanyak 200 responden.
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Yang, Shuxia, Xianguo Zhu, and Weishang Guo. "Cost-Benefit Analysis for the Concentrated Solar Power in China." Journal of Electrical and Computer Engineering 2018 (2018): 1–11. http://dx.doi.org/10.1155/2018/4063691.
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In 2016, the first batch of concentrated solar power (CSP) demonstration projects of China was formally approved. Due to the important impact of the cost-benefit on the investment decisions and policy-making, this paper adopted the static payback period (SP), net present value (NPV), net present value rate (NPVR), and internal rate of return (IRR) to analyze and discuss the cost-benefit of CSP demonstration plants. The results showed the following. (1) The SP of CSP systems is relatively longer, due to high initial investment; but the cost-benefit of CSP demonstration plants as a whole is better, because of good expected incomes. (2) Vast majority of CSP projects could gain excess returns, on the basis of meeting the profitability required by the benchmark yield of 10%. (3) The cost-benefit of solar tower CSP technology (IRR of 12.33%) is better than that of parabolic trough CSP technology (IRR of 11.72%) and linear Fresnel CSP technology (IRR of 11.43%). (4) The annual electricity production and initial costs have significant impacts on the cost-benefit of CSP systems; the effects of operation and maintenance costs and loan interest rate on the cost-benefit of CSP systems are relatively smaller but cannot be ignored.
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Prastyono, Prastyono, Noor Khomsah Kartikawati, Sumardi Sumardi, and Anto Rimbawanto. "Analisis Finansial Perkebunan Kayuputih Skala Kecil: Studi Kasus Pilot Project Pengembangan Kayuputih untuk Kelompok Tani di Kampung Rimbajaya, Distrik Biak Timur." Jurnal Ilmu Kehutanan 14, no. 1 (July 1, 2020): 3. http://dx.doi.org/10.22146/jik.57456.
Full textAbstract:
Produksi minyak kayuputih dari Kepulauan Maluku dan Pulau Jawa saat ini masih jauh di bawah permintaan kayuputih dalam negeri. Ekstensifikasi perkebunan kayuputih skala kecil yang dikelola oleh masyarakat dengan menggunakan benih unggul dapat menjadi solusi untuk meningkatakan produksi minyak kayuputih di Indonesia. Tulisan ini dimaksudkan untuk mengetahui tingkat kelayakan finansial dari usaha perkebunan kayuputih skala kecil dengan menggunakan data dari pilot project pengembangan industri kayuputih skala kecil di Kampung Rimbajaya, Distrik Biak Timur seluas 5 ha. Kelayakan finansial dilihat dari kriteria investasi yang umum digunakan yaitu net present value (NPV), internal rate of return (IRR), benefit-cost ratio (BCR) dan payback period. Hasil analisis finansial menunjukkan bahwa kebun kayuputih unggul skala kecil layak untuk diusahakan dengan NPV untuk jangka waktu 25 tahun pada discount rate 9,2% adalah sebesar Rp 757.171.972,00 (Rp 151.434.394,32 per hektar), IRR sebesar 72,74%, BCR sebesar 1,77 dan payback period setelah 2 tahun 3 bulan. Secara finansial perkebunan kayuputih yang menggunakan benih unggul lebih layak diusahakan dibandingkan dengan komoditas bambu, sengon, sawit dan kopi. Financial Analysis of a Small Scale Cajuput Plantation: A Case Study of A Pilot Project for A Farmer Group in Rimbajaya Village, East Biak DistrictAbstractProduction of cajuput oil from the Moluccas and Java Island is currently far below the domestic demand for the oil. Extensification of small-scale cajuput plantations managed by community using improved seeds is expected to increase cajuput oil production inIndonesia. This study investigates the financial feasibility of a 5 ha-cajuput plantation using data collected from a pilot project for a farmer group in Rimbajaya Village, East Biak District. Financial feasibility was assessed by calculating four investment criteria: netpresent value (NPV), internal rate of return (IRR), benefit-cost ratio (BCR) and payback period. The analysis showed that a small-scale cajuput plantation was financially feasible with NPV (25 years) at a 9.2% discount rate was IDR 687,583,363.00 (IDR 137,516,672.63 per hectare), IRR of 66.5%, BCR of 1.70 and payback period after 2 years and 3 months. Investation in a cajuput plantation planted with improved seeds is more feasible than that in bamboo, sengon, palm oil and coffee plantations.
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Ruddin, Syam. "Kelayakan Bisnis Café “Kopdar” di Tangerang Selatan Dari Aspek Kriteria Penilaian Investasi." Jurnal Mandiri : Ilmu Pengetahuan, Seni, dan Teknologi 4, no. 1 (June 22, 2020): 105–13. http://dx.doi.org/10.33753/mandiri.v4i1.110.
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The purpose of this study is to analyze the feasibility of "Kopdar" café business in South Tangerang. The focus of the business feasibility analysis is on the financial or financial aspects. This research is a quantitatively descriptive. The type of data used is primary data. While the method used is by means of financial analysis which includes Payback Period (PP), Net Present Value (NVP), and Internal Rate of Return (IRR). Based on the results and discussion, it is known from the three methods of financial analysis used above that it can be concluded that the investment in the café business in South Tangerang is financially feasible and can be accepted and continued. The results showed that PP is 6,149 months, or shorter than PP in the study area, which ranged from 9 to 24 months. Meanwhile NPV of Rp. 7,792,518.52 where the results of this NPV value show positive results. While IRR of 12.284%, higher than the return value prevailing in the market (discount factor) which is currently around 6.50%.
Abstrak
Tujuan penelitian ini untuk menganalisis kelayakan usaha café “Kopdar” yang ada di Tangerang Selatan. Adapun fokus analisis kelayakan usaha adalah pada aspek keuangan atau finansial. Penelitian ini bersifat deskriptif kuantitatif. Jenis data yang digunakan adalah data primer. Sedangkan metode yang digunakan adalah dengan cara analisis finansial yang meliputi Payback Period (PP), Net Present Value (NVP), dan Internal Rate of Return (IRR). Berdasarkan hasil dan pembahasan, diketahui dari ketiga metode analisis finansial yang digunakan di atas dapat disimpulkan bahwa investasi bisnis café yang ada di Tangerang Selatan dari aspek finansial layak dan dapat diterima serta dilanjutkan. Dari hasil penelitian menunjukkan bahwa PP adalah 6,149 bulan, atau lebih singkat dari PP yang ada di daerah penelitian yaitu berkisar antara 9 sampai 24 bulan. Sementara itu NPV sebesar Rp. 7,792,518.52 di mana hasil dari nilai NPV ini menunjukkan hasil yang positif. Sedangkan IRR sebesar 12,284 %, lebih tinggi dari nilai return yang berlaku di pasar (discount factor) saat ini yaitu sekitar 6,50 %.
Kata Kunci : Analisis Kelayakan, Aspek Finansial, PP, NPV, IRR
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Aisyah, Siti, and Muhammad Hanif Fachrizal. "ANALISIS FINANSIAL DAN SENSITIVITAS USAHA PENGGILINGAN PADI." Paradigma Agribisnis 3, no. 1 (September 25, 2020): 50. http://dx.doi.org/10.33603/jpa.v3i1.4101.
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Tujuan dari penelitian ini yaitu : (1) untuk mengetahui kelayakan usaha penggilingan padi dan (2) untuk mengetahui seberapa sensitif terhadap beberapa perubahan variabel yang mungkin terjadi yakni penurunan jumlah giling sebesar 10% dan kenaikan harga BBM (solar) sebesar 5,3% pada usaha penggilingan padi. Desain penelitian yang digunakan dalam penelitian ini menggunakan metode deskriptif kuantitatif dengan metode penelitian survei. Populasi yang digunakan merupakan pengusaha penggilingan padi di Kecamatan Lemahabang Kabupaten Cirebon yang sesuai dengan kriteria penelitian berjumlah 8 orang. Teknik analisis data mengunakan analisis kelayakan dengan pendekatan analisis investasi yaitu menggunakan NPV (Net Present Value), IRR (Internal Rate of Return), Net B/C Ratio, ARR (Average Rate of Return) dan Payback Period dan analisis sensitivitas perubahan variabel terjadi penurunan jumlah giling 10% dan kenaikan harga solar 5,3% Hasil penelitian menunjukan bahwa 1. Usaha penggilingan padi layak untuk dijalankan dengan nilai NPV (Net Present Value) sebesar Rp.21.804.273, IRR (Internal Rate of Return) sebesar 23%, Net B/C Ratio sebesar 1,18, ARR (Average Rate of Return) sebesar 58% dan Payback periode selama 3 tahun 6 bulan 7 hari. 2. Analisis sensitivitas dengan penurunan jumlah giling sebesar 10% mengakibatkan usaha ini tetap layak akan tetapi rawan untuk dijalankan karena mengakibatkan seluruh nilai kriteria analisis mendekati batas kriteria kelayakan dan pada saat penurunan sebesar 15% menjadi tidak layak, pada saat kenaikan harga solar sebesar 5,3% usaha ini masih layak untuk dilaksanakan karena dampaknya tidak terlalu berpengaruh secara signifikan. Kata Kunci : Penggilingan Padi, Kelayakan Usaha, Sensitivitas
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Jatmiko, Aji Tulus, Irwan Soejanto, and Intan Berlianty. "ANALISIS INVESTASI PEMBANGUNAN GUDANG PADA INDUSTRI PENGECORAN LOGAM." OPSI 12, no. 1 (June 17, 2019): 20. http://dx.doi.org/10.31315/opsi.v12i1.2829.
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Di tengah persaingan yang ketat, setiap perusahaan industri memiliki strategi dalam meningkatkan laba dan daya saing agar dapat bertahan. Salah satu strategi yang mendukungadalah sarana dan prasarana industri seperti sarana bangunan gedung. CV. AA. Teknik“ merupakan salah satu industri manufaktur yang bergerak dibidang pengecoran logam.Industri mengalami kesulitan terkait dengan sarana gudang penyimpanan. Perusahaan menyewa gudang pada Koprasi Unit Desa (KUD) daerah setempat. Letak sewa gudang yang terlalu jauh dan kapasitas sewa gudang terlalu kecil mengakibatkan produktivitas pada perusahaan tersebut terhambat . Maka, pemilik industri berencana melakukan pembangunan gudang. Untuk mengkaji permasalahan diatas, maka dilakukan analisis investasi yang meliputi aspek pasar, aspek teknis, dan aspek financial selama 10 periode. Modal awal investasi sebesar Rp. 124.861.000,00. Dalam aspek finansial kriteria penilaian investasi menggunakan metode Net Present Value(NPV) dengan tingkat pengembalian 15%, Internal Rate of Return(IRR), Profitabitality Index(PI), dan Payback Period(PP).Hasil dari penelitian berupa kesimpulan bahwa investasi pembangunan gedung layak dipertimbangkan berdasarkan aspek pasar, aspek teknis dan aspek finansial. Pada Aspek Finansial Net Present Value(NPV) sebesar Rp. 451.490.773,00. Internal Rate of Return(IRR) sebesar 32% (IRR>15%), Profitabitality Index(PI) sebesar 4,62(PI>1) dan pada Payback Periode (PP)investasi akan kembali selama 2 Tahun, 2 bulan, 23 Hari.
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Cuong, Tran, Tran Thi Quy Chinh, Yaoqi Zhang, and Yi Xie. "Economic Performance of Forest Plantations in Vietnam: Eucalyptus, Acacia mangium, and Manglietia conifera." Forests 11, no. 3 (February 29, 2020): 284. http://dx.doi.org/10.3390/f11030284.
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Forest plantations have expanded rapidly in response to financial support from the state and local governments and have had significant positive impacts on rural livelihoods and development in Vietnam, since the late 1980s. This study used net present value (NPV) and internal rate of return (IRR) to examine the economic performance of plantations for three species, Acacia mangium Willd, Eucalyptus (Eucalyptus urophylla S.T. Blake × Eucalyptus camaldulensis Dehn), and Manglietia conifera Dandy, in Bac Kan province. On the basis of an annual discount rate of 6%, the results showed that rural households earned positive financial returns from forest plantations with seven-year rotations. Eucalyptus generated the highest NPV but A. mangium generated the greatest IRR. The plantations were facilitated by financial support from the state, land tenure reforms, and wood exports. The results provide valuable business information and policy implications for both local farmers and policy makers. Since the farmers consider more of the short term and economic return of the plantations, the results provide valuable information for policy makers to apply subsidies and other support to promote plantations with significant ecological and environmental benefits for sustainable development of rural economies.
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Wagner, John E. "Expected Rates of Value Growth for Individual Sugar Maple Crop Trees in the Great Lakes Region: A Comment." Northern Journal of Applied Forestry 26, no. 4 (December 1, 2009): 141–44. http://dx.doi.org/10.1093/njaf/26.4.141.
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Abstract Webster et al. (Webster et al. 2009. Expected rates of value growth for individual sugar maple crop trees in the Great Lakes region. North. J. Appl. For. 26:133‐140) discuss updated recommendations for marking individualsugar maple trees in the Great Lakes region within a selection silvicultural system based in part on current market information. They calculate the annual rate of value growth (RVG) of individual trees for a single 10-year period using an internal rate of return (IRR) formula. It is the authors'misinterpretation of the IRR and RVG as an interest or discount rate similar to that used in a net present value calculation that is the focus of this comment. The interest rate includes information not contained in the IRR and is used to estimate whether an investment (e.g., marking decisionsfor sugar maple trees) will increase (or decrease) an individual's wealth. The distinction between what the IRR or RVG describes and the interest or discount rate is critical for determining the economic and financial implications of management decisions.